New SEAP Rules for Direct Debits

[callybags]

I attended a seminar run by Bank of Ireland which outlined the new rules for SEPA (Single European Payment Area) which will come into effect on 01st February 2014.

The one major change that stood out for me was the new regulations relating to Direct Debits.

The debtor (from whose account the money is being taken) will now have up to eight weeks to apply through their bank for a refund - no questions asked. Apparently this is already in force in some Euro zone countries and it is designed to give more protection to the consumer.

Why would any service provider or business continue to accept payment by direct debit under these new rules? In our company we have customers that pay by direct debit. We debit their accounts on the 30th of the month following date of invoice, so they are getting up to 8 weeks credit.
Under the new rules, another 8 weeks will have to pass before we are guaranteed the payment, as during this period the customer can, without giving a reason reclaim the funds from our account.

To me it seems like a regressive measure and will prolong the use of cheques and other antiquated methods of making payments.

 

[Jim2007]

This is true in Switzerland, but direct debits are almost never used in the first place and as far as I know it is the same in Germany and Austria...

Here there are three options:
- For goods many businesses use the COD services of the post office
- The business sends you an invoice and you pay it on line or via the post office
- The business sends the invoice directly to the bank, it appears in your e-banking and you authorise the payment.

As for cheques, they were outlawed well over 15 years ago!

 

[julius128]

This issue provided lot of question marks in the financial institutes and will definately cause lot of problem for some companies as well as institutions such as banks and credit unions which operate DD.
But as this is an European law all the financial institutes must comply with it once they introduce that by 1 Feb 2014. There was even discussion of appeal this decision by EU but earliest date they will look into appeal is 2 years time and they can simply dismiss the case then so is better they cope with it and produce internal procedures to stop miss use of the system.